Kenya’s Government Task Force to Explore Blockchains for Land and Education

Private companies, as well as national and local governments, have all caught media attention for announcing some kind of investigation or at least interest in the blockchain. Of course, one of the most notorious examples of this was Long Island Iced Tea Corporation’s pivot to Long Island Blockchain Corporation.

On February 28, 2018, the Kenyan government announced it will appoint a task force to explore the use of distributed ledger technology and artificial intelligence over the course of a three-month tenure. Led by Dr. Bitange Ndemo, the 11-member task force has three months to produce a road map that will detail how these technologies can be applied at a local level. The task force includes Steve Chege, Safaricom’s head of corporate affairs, John Gitou, Michael Onyango, Dr. Charity Wayua, Fred Michuki and Juliana Rotich, a serial tech entrepreneur who co-founded BRCK and Ushahidi.

The announcement came from Kenyan ICT Cabinet Secretary Joe Mucheru, who explained that, if implemented correctly, blockchain technology could be used to reduce corruption in education and land title registry.

The news comes after the Central Bank of Kenya cautioned investors against the use of cryptocurrencies though they are still very much unregulated within the country.

“We cannot ignore it [blockchain technology] as a country but we also cannot rush into it. We don’t have to be first mover, but definitely not last mover.”

Africa’s Fourth Industrial Revolution

Poor infrastructure is the main detriment to Kenya’s ability to address its high poverty and unemployment rates (unemployment could be as high as 40 percent). International financial institutions and donors are critical to the country’s economic development.

More than anything else, this announcement appears to represent a critical assurance that Kenya is taking actions with regard to global technology trends. The country averaged over 5 percent GDP growth for the last eight years.

“It is true that previous industrial revolutions have passed us by … this time, however, it is my hope that the fourth industrial revolution, driven by digital transformation, will not leave Africa behind,” said Kenyan President Uhuru Kenyatta on Kenya CitizenTV, speaking at a University Symposium on Digital Technology.

Kenyatta’s point sheds light on how blockchain technology is now perceived throughout the world. Nations are beginning to pay attention to the work happening in cryptocurrency and blockchain-based data infrastructures. Dozens of countries are starting to place regulations on the technology in some way.

For example, Estonia has built a virtual citizenship program using the blockchain. Venezuela’s love-hate relationship with cryptocurrency seems to have solidified since launching Petro, the first government-backed cryptocurrency, as a way for the country to save itself from economic collapse. And the Marshall Islands have issued the first cryptocurrency that will serve as a sovereign nation’s legal tender.

“There has been a thaw in the regulatory stalemate in Kenya in regards to blockchain. It is a big step forward,” said Elizabeth Rossiello, CEO of the digital foreign exchange and payment platform BitPesa.

M-Pesa: Kenya’s Other Digital Payment System

Started in 2007, M-Pesa is a phone-based money transfer launched by Safaricom — Kenya and Tanzania’s largest mobile network operators. It has since expanded to Afghanistan, South Africa, India, Romania and Albania.

M-Pesa is not so different from cryptocurrency; with it, customers can deposit and withdraw money, transfer it to others, pay bills, and move money between the M-Pesa service and a bank account. The key difference between M-Pesa and most cryptocurrency is centralization versus decentralization. M-Pesa is owned by Vodafone, a mobile operator, not a bank. It is pegged directly (1:1) to the Kenyan shilling (KES). And converting or trading M-Pesa must be done physically with a mobile device either interacting with an ATM or another mobile device.

Overall, there has been a significant lack of regulatory clarity around emerging financial technologies in Kenya up to this point. Rossiello noted that “if there was more regulatory clarity, there would be room for start-ups operating in Kenya to finally be allowed to use blockchain technology AND be allowed to own bank accounts.”

Though excited, Rossiello is insistent that true implementation of the technology in Kenya will require patience and more education.

This news comes in the wake of BitPesa’s acquisition of the European money transfer platform ZeroTransfer, and its recent announcement that it intends to launch a foreign exchange and payment platform in South Africa later this year. BitPesa operates not just in Kenya but also in Uganda, Tanzania, the DRC, Nigeria, Senegal, the United Kingdom, Luxembourg, Mozambique, Spain and Ghana.